Four functions of innovation and technology management

This article is meant for my business clients and colleagues managing technology transfer and innovation extension services.

In the past I have written much about the professionals and organisations who are responsible for helping entrepreneurs to improve and strengthen their innovation portfolios on my personal blog site.

To recapitulate: I believe that many industries are struggling to modernise because their supporting institutions use completely different frameworks to manage innovation (or perhaps the supporting institutions make their choices as randomly as enterprises do).

One of the first concepts that a tech transfer institute or industry support organisation should transfer to enterprises is “how to manage innovation and technology”. Just because there is an engineer or an MBA/PhD in a company does not guarantee effective or creative management of innovation and technology.

Today I shall focus on the four broad functions that must be managed strategically in every enterprise and supporting institution. Even if someone in the organisation has the job title of Innovation Manager or Technology Manager, these functions should still be visible throughout the organisation. In other words, this is not somebody’s job, but it helps if somebody coordinates these activities. Also, see these four functions as the minimum. More mature innovating organisations will have far more depth than these four high level headings.

The four functions agreed by most scholars and innovation experts can be summarised roughly as:

  1. Searching and scanning for new ideas and technologies, both within and beyond the organisation. This includes looking at technologies that could affect the clients of the organisation, and technologies that could disrupt markets and industries.
  2. Comparingselecting and imagining how different technologies could impact the organisation, its markets and its own innovation agenda.
  3. Next comes integrating or deploying the technology or innovation into the organisation. This includes adjusting processes and systems, scaling up implementation, and project managing the whole change process.
  4. The last step is often overlooked, but new technology and innovation often make new ideas, innovations and improvements possible. I call this last step exploiting the benefits of a new technology or idea. This could involve leveraging some of the additional benefits or features of a technology, perhaps by creating a new business unit focused on an adjacent market or particular offering.

When I visit institutions, organisations and companies, I always ask “who is thinking about change taking place beyond your industry or key technology?”. I cannot tell you how often I hear that “the CEO” or “the production manager” are on top of new developments and will be attending a tech fair next year. How can this huge responsibility fall on the shoulders of one or two people, who are at the same time biased towards the current strategy which favours justifying past (sunk) investments? Or if you ask “How did you choose between two technologies?”  you will be surprised how little time was spent considering new business opportunities, or how few companies asked for on-site demonstrations or samples from their preferred technology providers.

I will refrain from being too critical of technology transfer institutions and industry-supporting organisations, except to say that these organisations should be a prime example to industry of how to scan, evaluate, compare and integrate new ideas and technologies. We don’t just want to see the shiny machines and neat facilities, we want to understand how you arrived at your decisions, and how you made the best of your investments after implementing the change. Furthermore, industry wants to know what’s next, or what’s beyond their vision and how it may affect their industry.

To bring it all together, the technological upgrading of industries is plagued by many different market failures. These failures include the tendency NOT to invest due to high research costs, due to fears about making the wrong choices, or because so many decisions and changes must be made at the same time – this while the business continues, markets fluctuate, and technologies change faster and faster. Companies (and institutions) cannot afford just to kick start innovation management immediately before making a change (or when forced by external forces to make a decision). These functions must be managed strategically on a continuous basis, both at the level of top management and within the different functions of the organisation. Both companies and their supporting institutions need to manage innovation and technology, not only from an operational perspective (striving for continuous improvement, etc.) but also from a strategic point of view.

Innovation as culture rather than as a technique or function

No tool or technique will improve the innovation culture of your company – it is a relationship thing and leadership is central to success.

I share some thoughts in this weeks Thought Thursdays newsletter of the USB Executive Development.

 

Click here for the article on the USB-ED website,

How to recognise 3 kinds of innovation in your organisation

When I am asked to help a team with their innovation strategy, I always ask about their past innovation activities. Often I am told that they are not yet innovating, or that they innovate infrequently, or that they are planning to innovate more in the future. However, if you ask the team to think about recent attempts to change, improve and restructure their activities, they quickly come up with a long list of innovations that they never recognised as such. These improvements might have achieved a specific purpose, but perhaps they could have been leveraged to have a more profound effect on the organisational culture. Almost every opportunity to adapt something in an organisation is also an opportunity to strenghten the learning culture, build trust, deepen the use of knowledge, encourage experimentation and to be more innovative.

To help teams recognise how they might have innovated in the past, I explain three different kinds of innovation. It is by looking back that we can also look forward.

The most easily identifiable form of innovation is innovation aimed at developing new or improved products and services. In technical products this product development process may require deep knowledge of how to harness natural phenomena or use certain technology, while in other sectors like the food sector developing a new product may require a good understanding of consumer tastes and different ingredients. Not all new products require a complicated design and development process.

Process innovation is slightly more difficult and involves making improvements to existing products and services or designing completely new products and services, often in an incremental or ongoing way. Process innovation could be aimed at improving efficiency and reducing waste or costs, or it could be the introduction of new equipment and technologies into an existing process. While many smaller companies lack this process improvement ability in-house, even high-tech manufacturers depend on specialists external to the organisation. In places where these experts or specialists are not available, process improvement costs are much higher and improvements are more difficult to implement. In many industries, product innovation is made possible by new process innovations, so manufacturers who integrate new equipment into their production facilities may be able to offer new products and services simply by upgrading their systems. An interesting phenomenon is that enterprises that are good at continuous process improvement are often able to introduce many more product innovations, as they typically have internal systems for product development, product distribution and knowledge accumulation.

The third kind of innovation is focused on business model innovation and organisational design. This kind of innovation is all about internal organisation, functional specification, combining different kinds of internal expertise, knowledge and technology domains and being able to adapt the management of a company division based on differences in specific contexts. We include innovation in marketing strategies, innovation in supply chain integration, and innovate approaches to co-opting or working with customers as well as improved management models under this heading. Enterprises that are able to manage innovatively tend to be better at process innovation, resulting in more options and the ability to improve products or services.

Many improvements that my clients want to undertake span all three of these types of innovation. Yet, the way how you go about innovating are slightly more difficult and may require different team and expertise configurations.